Why You Should Meet with an Estate Planning Attorney

By: Andrew Burrows

By having an estate plan, you can avoid placing a significant burden on your loved ones.  This burden includes deciding who will receive your property after your death and how your affairs will be administered if you are unable to carry on during life. Failure to plan ahead can result in high legal costs and a long, drawn out process associated with probate, both during your life and after your death. It is our hope that this article will inform people of some of the less obvious reasons to meet with an estate planning attorney.

1.  Placing your Affairs in Order is Much Less Expensive than Doing Nothing

One of the most common concerns associated with estate planning is the upfront cost. Although drafting a concise and effective set of documents is not without cost, it is far less expensive than not having a plan in place. An experienced attorney can ensure that your fees are kept as low as possible while drafting a personalized set of documents including a will, trust, powers of attorney, and the other documents that are required to meet your needs.

      2.   Michigan Law is Particularly Unforgiving for Those who Do Not Have an Estate Plan

      The law of estates and trusts varies greatly between the states. Michigan is a state that greatly benefits those who have a formal estate plan and punishes those who do not. When someone dies without a will, a decedent’s property passes through what is called intestate succession. Under intestate succession, a decedent’s property is distributed at a formal probate court proceeding to the decedent’s surviving spouse and/or heirs automatically, and in amounts determined by law. This proceeding is quite complex and requires significant attorney participation, which can get quite expensive.  Many individuals do not realize that even if they have a will, probate court is still required to administer the estate, assets, debts and expenses. By drafting an estate plan that includes a living trust, formal probate proceedings are avoided, and typically all the decedent’s property can be distributed without any probate court involvement whatsoever.

      3.  Estate Planning Addresses Life Events, Not Just Death

    Another common misconception is that healthy, young people don’t need an estate plan.  Estate documents address life events and death events. A well-designed estate plan contains documents that will allow a loved one to make medical decisions for you and prevent loved ones from having to guess what you would have wanted should serious illness or injury occur. The living trust and the power of attorney permit a family member, as opposed to the probate court, to help with decision-making and long-term care arrangements. In addition, all assets, income, expenses, insurances and other financial obligations can be handled smoothly and inexpensively.

Action Step

Determining an individual’s unique situation and what documents are needed is typically outlined with clients in the first meeting. It makes good sense for individuals and couples to contact an estate planning attorney to get the process underway sooner rather than later.

The Importance of Employment Applications, Employment Agreements, and Employee Handbooks

By: Ashley Prew

Employment applications, employment agreements, and employee handbooks are sometimes neglected by business owners who hire employees.  When used in together, a properly drafted employment application, employment agreement, and employee handbook can be effective tools to protect the Company and shield the business owner from some of the risks associated with maintaining employees. 

Employment Applications

An Employment Application provides the key information on a prospective hire and grants authority to investigate the prospective hire’s credit, criminal, civil and employment background.  In addition, it sets forth the Company’s at-will employment policy and permits the Company to discharge the employee if he or she falsified information in the employment process based upon after-acquired evidence.

Employment and Engagement Agreements 

An employment or engagement agreement is a contract used to establish the rights and responsibilities of both a worker and the Company.  Properly drafted employment agreements can protect the Company by establishing and addressing the following:

1. Whether the worker is at-will.
2. The relationship between worker and employee.  Specifically, the agreement should define whether the worker is an employee or an independent contractor.  If a Company decides to classify a worker as an independent contractor, it is important that the terms of the engagement and the terms of the agreement meet specific requirements under the IRS guidelines that allow the worker to be classified as an independent contractor; 
3. The responsibilities and duties of both the employer and the worker;
4. The payment structure for the worker. The agreement should also clearly establish how commission is earned and paid, if applicable;
5. The procedure for termination of employment or engagement by either employer or worker; and
6. Appropriate, non-disclosure, nonappropriation, confidentiality, non-solicit and/or non-compete provisions and work made for hire should be included to protect proprietary information, current customers and prospects of the business, and protect the Company from predatory business practices.  

Employee Handbooks

Employee handbooks help to provide a strong basis for defining the relationship between the Company and its employees.  Employee handbooks can benefit a Company in the following ways:

1. Provide an in-depth description of company policies and employee expectations beyond what is contained in the employment agreement;
2. Address industry specific, applicable federal and state laws, and protect the Company and employees by  articulating that the Company will adhere to these laws and regulations; and 
3.   Protect the company from potential disputes regarding the expectations of employees. 

Employment agreements and employee handbooks should be used together to establish employee expectations, maintain employer/employee relations, and to protect the Company and its employees.  An effective employment agreement often references the employee handbook or incorporates the handbook as part of the agreement by reference. 

Agreements and handbooks should always be specialized based on the type of business, the types of employees/independent contractors, and the culture and expectations of the company.  Therefore, we do not recommend using the internet to find a generic employment application, contract or handbook. Instead, working with qualified professionals such as a business law firm and a human resources firm ensures that the agreements and handbook are drafted to meet each specific business’ legal and human resources needs.  When properly drafted, used, and upheld, these documents can protect the business from potential issues with current and former employees.  

Buying a Franchise

By: Tim Williams

Franchising is a business model that companies use to expand their brand or system. If a company (the “franchisor”) is franchising to expand, it packages and sells its business concept – with varying degrees of support – to individuals (“the franchisees”).  The franchisees, in turn, initiate the franchise business and pay a franchise fee and royalties to the franchisor. The franchisor will have detailed written disclosures and contracts it uses to engage franchisees who wish to buy into the system.

During and immediately following the Great Recession, many people have concluded that they want to own and run their own business. This stems, in part, from individuals who were formerly employees who wish to have more control over their future. The workplace became, and to some degree still is, unstable due to a variety of forces, some of which are cultural.

Buying a franchise is a life decision that involves a variety of important factors including, but not limited to, suitability, financial, and legal issues. The key legal issues in considering whether or not to buy a franchise include:

1.             The “legal” and business reputation of the franchisor.

-       How has the franchisor dealt with franchisees in legal disputes?

-       Has the franchisor generally been compromise or combat oriented?

-      Talk to and visit recent franchisees to inquire into their experience with the franchisor.

A good legal and business workup on the franchisor will reveal much, which is important in advance of paying a significant sum of $100,000 or more for a franchise.

2.      Discover all the hidden costs, the franchisee’s finances and financial commitments,   understand the market, and the competition in your local area.

-       Is it a business which is easy or more difficult for others to enter?

-   Conduct thorough due diligence of the franchise you are looking to purchase, so you’re able to make an informed business decision.

3.             Know the franchise agreement.

-       Your franchise agreement will have a big impact on whether or not your franchise succeeds.

-       You should know how it’s drafted and whether it contains an exit opportunity.

-   You should know the proper disclosures, any territorial restrictions, fees, and obligations you have as a franchisee.

-        You should know what happens if there’s a breach of contract and your recourse for misrepresentations or failures on the part of the franchisor to provide support.

4.              What happens to your franchise if the franchisor is acquired by another company?

-       Can the acquiring company change the name of your business without your permission?

-       Who pays for all of the costs and lost business traction that results from a name change?

5.             Can you sell your franchise to a third party without undue restriction?

A franchise may be a good choice for some but not others. A thorough investigation will help you to sort through the issues and risks in relation to your own situation.

Precautions to Take When Sharing Confidential Business Information

By:  Adrienne Knack

Most businesses have important, confidential business information that needs to be protected.  This includes customer information, pricing, trade secrets, business practices, work product, copyrights, trademarks, service-marks, and other intellectual property and proprietary information.  There are many, everyday situations in which this information is shared, including with employees, independent contractors, distributors, and manufacturers.  Confidential business information is also shared during the process of buying or selling a business.  Often, such information is shared without realizing the dangers associated with its dissemination. 

Dangers of sharing confidential information

Employers expose much of their confidential information to their employees without hesitation.  Most of the time, it is imperative to the operation of the employer’s business to do so.  This is also true regarding pricing and business practices. Unfortunately, an employee who leaves the business may attempt to take this information to a competitor and use it against his or her former employer.  The competing business may then use this information to try to lure customers away from the business owned by the former employer, or for another predatory business practice.  Another danger is sharing too much confidential information when exploring the sale or purchase of a business.  A competitor may pretend like it is interested in acquiring a business simply for the fact that it may obtain proprietary information to use in its own business in the process.

Trademarks, service marks and branding are pieces of information that are used every day.  Businesses use these marketing tools to build the goodwill of their business.  Because this information is shared so freely, it is most vulnerable to being stolen.  If not properly protected, the livelihood of the business can be copied in an instant and used by a competitor to confuse and take customers.

Another relationship that leads to the sharing of proprietary information is when a business works with a manufacturer and/or a distributor.  Important trade secrets like recipes, packaging, and labeling are shared with the manufacturer or distributor out of necessity.  Without the proper safeguards in place, there is nothing that prevents a manufacturer or distributor from sharing this confidential business information with others.

Protections

There are certain steps that businesses must take in order to protect valuable confidential information.  A lot of these protections are encompassed in specialized and specific agreements, including:

1. Non-disclosure agreements;
2. Employee agreements;
3. Independent contractor agreements;
4. Licensing agreements;
5. Purchase agreements;
6. Consulting agreements;
7. Confidentiality agreements;
8. Non-appropriation agreements;
9. Non-compete agreements; and
10. Non-solicitation agreements.

Most of these agreements can either be freestanding or used in conjunction with one another.  Often, specialized clauses encompassing one or more of these ideas are contained within a single agreement.  For example, an employer’s agreement with its employees will often include non-compete or non-solicitation covenants, as well as non-appropriation and confidentiality covenants.

In addition to having these protective agreements in place with employees, independent contractors, potential purchasers/buyers, manufacturers, distributors, etc., there are other precautions a business must take to protect its confidential and proprietary information.  These precautions include having a properly formed business entity and consistent upkeep of the company’s corporate documents, registering trademarks and service-marks at the state and/or federal level, and registering copyrights and patents with the United States Patent and Trademark Office.

It is also very important to have these agreements and policies reviewed and updated frequently to ensure that the business is protected as the business environment evolves.